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ECB Chief Mario Draghi writes that fulfilling the ECB's mandate of ensuring price stability and...

ECB Chief Mario Draghi writes that fulfilling the ECB's mandate of ensuring price stability and a single monetary policy "sometimes requires us to go beyond standard monetary policy tools" and "may at times require exceptional measures." Draghi's comments, made in an article in Germany's Die Ziet, may well turn up ECB bond-buying speculation to fever pitch. EU markets, though, shrug and stay lower.
Comments (10)
  • Amadon
    , contributor
    Comments (163) | Send Message
     
    While ECB Chief Mario Draghi considers the use of exceptional measures, he may want to consider the words of Paul Volcker, chairman of the Board of Governors, in a speech he gave in 1984:

     

    Industrial nations, including our own, nowadays rely heavily—sometimes too heavily—on their central banks and on monetary policy to achieve our economic goals: to promote growth and employment, to blunt the forces of inflation, and to maintain financial stability. At times, the pursuit of those objectives requires speed and flexibility in decision-making, and that flexibility is one of the virtues of monetary and credit policy. But through the necessary process of adaptation and change runs another, more constant, threat—the need for a sense of discipline. In the broadest sense, all of economics—I am tempted to say all of life—teaches us that our collective desires always exceed the means to achieve them. And history has taught us, again and again, that the creation of money is no substitute for productivity, for savings, and for investment in enlarging our economic welfare. Yet the temptation is always there to try—with the ultimate result of destructive inflation that, in the end, only undermines those goals.
    http://bit.ly/OpLjQm
    29 Aug 2012, 06:51 AM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    --the creation of money is no substitute for productivity, for savings, and for investment in enlarging our economic welfare--

     

    To which I'd add: and economic freedom.
    29 Aug 2012, 12:24 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    It is so much easier...so much easier for a politician to print money...than it is for them to cut someone´s pay or program...printing money gets immediate results and the pain is postponed down the road...Politicians win....unfortunatly it is bad for the whole country...
    29 Aug 2012, 07:32 AM Reply Like
  • Amadon
    , contributor
    Comments (163) | Send Message
     
    At its heart injecting liquidity into the market works the same as a "chain letter" or pyramid scheme. The only winners are the first in, (financial institutions), which results in even more concentration of wealth at the top and is paid for by everyone else further down the economic totem pole, most of whom do not even realise what is occurring. Small wonder that the market is so sensitive to the musings of central bank chiefs. Because the economically disadvantaged have no true advocate to protect their interest either in public or private institutions the boom/bust cycle will continue. Productivity, savings, and investment in enlarging our economic welfare are playing a sorry second fiddle to the pandering to politicians wishes to escape some harsh realities and over-reaching promises.
    29 Aug 2012, 08:02 AM Reply Like
  • robgra
    , contributor
    Comments (456) | Send Message
     
    Is it any surprise that bankers would be very fond of a mechanism which tended to enrich them before all others?
    29 Aug 2012, 09:56 AM Reply Like
  • crossi40
    , contributor
    Comments (27) | Send Message
     
    This just means MONEY PRINTING at full speed and near zero interest rates. Bad new for savers and good news for debtors, especially broken governments like all 5 PIIGS.
    My bet: gold, energy and food commodities, mREITS and brick and mortar condos.
    29 Aug 2012, 10:03 AM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    All talk, no walk.
    29 Aug 2012, 10:59 AM Reply Like
  • Joe Razorback
    , contributor
    Comments (281) | Send Message
     
    Wait and See. This guy blabs and blabs... Goldman ex-executive what do you expect..
    29 Aug 2012, 12:46 PM Reply Like
  • Skier99
    , contributor
    Comments (70) | Send Message
     
    The periodical is named Die Zeit, not Die Ziet
    29 Aug 2012, 01:45 PM Reply Like
  • NGHY
    , contributor
    Comments (4) | Send Message
     
    The amount of money in the economy, by itself is only half the issue. The velocity of money as it changes hands in transactions is the second part. The fed can only affect the amount of money. The velocity of money is the result of millions of buying and investment decisions by individuals and businesses. Right now businesses and individuals are hoarding money, holding illiquid assets and postponing purchases. These are the key problems holding back the economy, today. The fed has the power to pump money into the system to induce spending and investment. It can also buy some of the illiquid assets. Europe needs the same facility but lacks the political structure to duplicate fully the U.S. system. Sooner or later mass psychology is going to change and the desire to hoard resources will give way to the desire to spend and invest. Then the fed will need to pull in the money supply. This should be fed best practice. So all of you who expect radical inflation around the corner, it's not going to take place until the velocity of money accelerates, factories approach full production and unemployment drops below 5%.
    29 Aug 2012, 03:12 PM Reply Like
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